What section of the Cinnaholic franchise agreement outlines the requirements that must be satisfied for a transfer to be approved?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor's approval of any Transfer is, in all cases, contingent upon the following: the purchaser and/or the controlling persons of the purchaser having a satisfactory credit rating, being of good moral character, having business qualifications satisfactory to Franchisor, being willing to comply with Franchisor's training requirements and being willing to enter into an agreement in writing to assume and perform all of Franchisee's duties and obligations hereunder and/or enter into a new Franchise Agreement, if so requested by Franchisor, and agreeing to enter into any and all agreements with Franchisor that are being required of all new franchisees, including a guaranty agreement, or any other agreement which may require payment of different or increased fees from those paid under this Agreement; provided, however, the amount of the Royalty Fees paid hereunder shall not be increased upon an assignment;
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Section 19.4 of the franchise agreement details the requirements for transfer approval. Specifically, Cinnaholic's approval of any transfer is contingent upon several factors related to the purchaser. These factors include the purchaser's credit rating, moral character, and business qualifications, all of which must be satisfactory to Cinnaholic.
Additionally, the purchaser must be willing to comply with Cinnaholic's training requirements. They must also be prepared to enter into a written agreement to assume and perform all of the franchisee's duties and obligations under the existing agreement. Cinnaholic may also request the purchaser to enter into a new Franchise Agreement and any other agreements required of new franchisees, such as a guaranty agreement.
It's important to note that while Cinnaholic can require new agreements with potentially different fees, the Royalty Fees paid under the original agreement cannot be increased upon assignment. This provides some financial predictability for the purchaser. Cinnaholic assures that it will not unreasonably withhold consent to a transfer, provided all the requirements of Section 19.4 are met, offering a degree of reassurance to franchisees looking to transfer their business.